Car Insurance Rates 101: Why Your Rates Are What They Are
Sky-high car insurance rates challenge your budget and force you to rethink your insurance strategy. Legally, motorists must carry a certain amount of minimum auto insurance, as stipulated by state law. Depending on where you live, you may be required to have bodily injury liability coverage, property damage coverage, uninsured/underinsured motorist coverage, and personal injury protection. Indeed, the more you explore the different facets of car insurance, the deeper and more complex the whole affair can seem.
This essay will boil down the key factors that companies use to set car insurance rates, explain battle-proven methods for getting rates down (without sacrificing coverage quality), and look “beyond discounts” to see how you can most effectively tailor your coverage for your needs.
3 Factors That Influence Car Insurance Rates
- Driving History — Insurance companies will look at your level of driving experience, whether or not you have been in any accidents recently, whether or not you have made any claims or gotten any traffic citations within the last three years, and how many miles on average you drive per year. The companies examine these factors because they want to assess how risky you will be to insure. Drivers who have been in accidents and received traffic citations tend to be at higher risk for getting into more accidents and getting more traffic citations.
- Vehicle Related Factors — Certain cars, such as high performance sports cars, may be more vulnerable to theft and vandalism. Other cars, such as SUVs, may be higher than average rollover risks. In fact, insurance carriers analyze detailed data on practically every make and model out there, and the safety history of your make and model will definitely be taken into account — as well any factors specific to your car.
- Your Demographic — Very young teenage drivers tend to be riskier than middle-aged drivers who have demonstrated years of safe experience behind the wheel. It may not seem fair that your car insurance rates will be determined by your age and experience, but that’s reality. The good news — for young and inexperienced drivers, at least — is that the more you drive, the more you can demonstrate a safe road record, and the lower your rates will ultimately become.
Getting Car Insurance Rates Under Control
You can employ dozens of tactics to get rates down, including paying off your premium upfront in an annual lump sum (as opposed to monthly), applying for a home/auto discount, insuring more than one vehicle for a multi-car discount, taking a defensive drivers course, and even garaging your car in a neighborhood with low crime statistics.
In addition to these (and other) battle tactics to get rates down, consider hiking up your deductible — this is the amount of cash that you pay out of pocket before your insurance company will help on a claim. Finally, talk to an insurance agent to work out a more personal, tailored strategy to bring rates under control.
Moving Beyond the “Discount Mentality” for a Better Long-Term Approach
It’s all well and good to shop for discounts and try out the battle tactics named above. But optimizing your insurance isn’t about paying as little as possible for it. It’s about getting the most “bang for your buck” for your policy. Assess and reassess the dynamic factors that go into setting your car insurance rates and shop around for great quotes.
For help with the quote shopping process, look to NetQuote, a reliable service that’s been helping policy shoppers like you since 1989. Get five free auto insurance quotes today.
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